$380 Million More to Benefit Farmers, Ranchers in Keepseagle Compromise

$380 Million More to Benefit Farmers, Ranchers in Keepseagle Compromise

A recent federal court decision is a game-changer for tribal economies and the overall health and well-being of American Indians and Alaska Natives, says Crystal Echohawk, Pawnee Nation of Oklahoma, who has long been working with colleagues, the Shakopee Mdewakanton Sioux Community and the American Heart Association to promote food sovereignty in Indian country.

U.S. District Judge Emmet G. Sullivan on April 20 approved the creation of a $265-million Native American-controlled trust to benefit AI/AN farmers and ranchers, the largest such trust ever created. The money is left over from the fund set up by Congress in 2011 to settle claims of discrimination by the the U.S. Department of Agriculture against Native American food producers.

In 1999, Marilyn and George Keepseagle, Sioux, filed a class action lawsuit alleging the federal government had illegally discriminated against Native American farmers and ranchers in the administration of the Farm Loan Program, a group of credit opportunities to help food producers pay operating costs, purchase farms, implement conservation practices, buy livestock, seed and equipment, and meet other obligations.

After 10 years of wrangling, the Obama administration offered to settle the case in 2010 for $680 million. Judge Sullivan approved the settlement agreement in 2011 and Congress appropriated the money to pay the claims. Any money left over would be subject to a cy pres (pronounced “sigh pray”) distribution, as is common in class action lawsuits.

Under the terms of the settlement, the lawyers for the class would select nonprofits that served AI/AN ranchers and farmers and distribute the remaining funds to them. The intent of a cy pres distribution is to benefit members of the class that sued who – for whatever reason – were not able to pursue a successful claim and receive funds directly.

And this is where things went awry. The settlement agreement gave claimants two tracks for compensation. Track A claimants would receive up to $250,000 in compensation, while Track B claimants would get up to $50,000. Claimants had only 180 days in which to file their requests for compensation.

By 2013, when all of the funds should have been dispersed, there had been only 3,587 successful Track A claimants whose awards came to $224,187,500 ($179,350,000 in direct payments to class members and $44,837,500 in payments to the IRS) and only 14 successful Track B claimants whose awards totaled $3,364,647, leaving $380 million in undispersed funds.

In a 2013 statement, the Keepseagles said there were many reasons why so many potential claims had gone unpaid, “including the deaths of potential claimants during the time it took to settle the case, the lack of initial documentation by the USDA, and, finally, general skepticism of the government by many.”

The Keepseagles and other class members went back to court and asked that another period of time be allowed for claimants to come forward, but the judge said that given the terms of the 2011 settlement agreement, which included the 180-day limit for claims to be filed, he could not do that. Nor, he said, could he accede to the request that the $380 million in excess funds be distributed to the claimants who had been successful in their original claims, again because the original settlement agreement specified the maximum amount that those claimants could receive.

The government threatened to take back the $380 million if the class members persisted in their request for further payment. The judge sent everyone back to the negotiating table to find a solution.

The compromise, which is what the judge approved on April 20, gives each of the prevailing claimants an additional $21,275 in payments ($18,500 in direct payments and $2,775 to the IRS as tax relief payments), puts aside $38 million to be distributed to nonprofits chosen by class counsel and orders that the remaining $265 million capitalize the Native American Agriculture Fund, a trust that over the next 20 years will make awards to nonprofits, including tribal colleges and CDFIs that serve AI/AN farmers and ranchers.

In his order, Judge Sullivan quoted Marilyn Keepeagle as saying, “While I proposed a larger supplemental distribution [to the prevailing claimants], I support the proposed Addendum [this compromise] because it is the best available compromise and the best option available for improving the terms of the Settlement Agreement in a timely manner.”

John Dillard, one of the attorneys who represented the Keepseagle in this latest round of negotiations, says, “We’re pleased and the Keepseagles are pleased that Judge Sullivan agreed to side with us on the settlement agreement. It’s been clear from the beginning that Mrs. Keepseasgle has endeavored to make sure that as much money as possible goes directly to the claimants. We didn’t have a lot of realistic options moving forward and we decided the best option was in going with the working out of the settlement agreement. A lot of credit is due to Mrs. Keepseagle to keep on fighting this case; there’s going to be an additional $77 million distributed directly to claimants that otherwise would not be because of her efforts.”

Not everyone agrees.

Attorney William Sherman has filed a class action complaint against Secretary of Agriculture Tom Vilsack and U.S. Attorney General Loretta Lynch on behalf of William H. Smallwood and others arguing that the executive branch’s (in this case the USDA and DOJ) distribution of the cy pres funds is illegal and unconstitutional because it amounts to an appropriation and only Congress has the power to appropriate funds. Or, to put it in terms that are current: the Obama administration has overstepped its authority.

Sherman says the argument would apply whether the cy pres distribution involved $1 or $380 million and that it calls into question all cy pres distributions, which, he says, have been more closely scrutinized over the past few years. Smallwood takes the position that Marilyn Keepseagle put forward—the $380 million should be distributed among the prevailing claimants.

Others argue that the compromise is flawed because it puts millions of dollars into the hands of people who were not harmed by the USDA’s discrimination in the first place, people whom Keith Mandan, a North Dakota rancher with the Hidatsa Tribe, has called “undeserving third parties.”

Assuming that Judge Sullivan’s April 20 order is actually the end of this case, Echohawk says the Keepeagle trust fund will provide “an opportunity for tribes to work with their own producers in partnership and to really look at how they can strengthen their own local Native food systems to provide access to not only healthy food but Native-sourced food and traditional food.” The trust will also help bring other funders to the table.

“It’s a landmark decision,” she says. “It’s a game-changing decision for Indian country.”

Coordinated by Echohawk Consulting and supported by the Shakopee Mdewakanton Sioux Community and the American Heart Association, the second meeting of philanthropies with an interest in promoting food sovereignty in AI/AN communities, Fertile Ground II: Growing the Seeds of Native American Health, is scheduled for May 2-4 in Minneapolis.